Korea Gripped by Bitcoin Frenzy

Koreans have been gripped by a frenzy for the cryptocurrency bitcoin and many are paying a premium for it. The Financial Times on Thursday said even youngsters are dabbling in bitcoin despite government warnings.

Korea accounts for only 1.8 percent of global GDP and a mere 0.7 percent of the world population but takes up a whopping 10 to 30 percent of Bitcoin transactions around the world.

According to CoinMarketCap, a cryptocurrency website, US$14 billion worth of bitcoins changed hands around the world in the 24 hours ending 8 p.m. Thursday, 14 percent of it transacted in Korean won.

The bitcoin price has doubled over the past month but the cryptocurrency has also attracted the attention of hackers, who have stolen millions of dollars worth. On Thursday evening, 1 bitcoin was sold for $14,900 or approximately W16.33 million in the U.S. but W19.54 million in Korea (US$1=W1,095).

"There's no definitive explanation for why bitcoin has grown so popular in Korea, but local analysts point to a mix of geopolitical and cultural factors," Bloomberg said.

It quoted a Korean psychologist as saying, "Bitcoin's stateless status appeals to some Koreans who've grown wary of keeping their savings in a country that shares a border with Kim Jong-un's increasingly belligerent regime in North Korea."

/Bloomberg

The frenzy is also fanned by Korean investors' "affinity for supercharged financial wagers," it added. "Equity derivatives are wildly popular in the country, in part because they allow investors to make leveraged bets. Korea's market for stock-index options was the most active worldwide by number of contracts until the government began cracking down on speculation in 2011," it said.

Meanwhile, the Guardian reported that hackers have stolen nearly $64 million worth of bitcoin by breaking into a Slovenian exchange and changing users' passwords.

The hack was "a highly professional attack with sophisticated social engineering" and netted approximately 4,700 bitcoin, it quoted NiceHash head of marketing Andrej Škraba as saying.